Forex effect helps Schroders weather hard start to year

By Simon Jessop LONDON (Reuters) - Schroders , Britain's biggest listed fund manager, said assets rose 3.6 percent to a record high in the first quarter, boosted largely by currency gains as concern Britain could leave the European Union weighed on sterling. That increase masked a tough quarter for its funds as renewed concerns about global growth in January and February prompted some investors to exit the market, missing out on a recovery that got under way in March. The group's assets at the end of March stood at 324.9 billion pounds, up from 313.5 billion at the end of the prior quarter, beating a company compiled consensus of 10 analysts of 321.7 billion. "Today Schroders has reported a surprisingly respectable set of results, which is pleasing," said RBC analyst Peter Lenardos in a note to clients. "We feared the quarter would be much worse given the market backdrop." Net inflows into its asset management business during the quarter were 2.7 billion pounds, driven in large part by 4.5 billion pounds from institutions such as pension funds, which outweighed retail outflows of 1.8 billion pounds. The firm said it had seen particularly strong demand from institutional investors for its multi-asset and fixed income funds. Inflows into its European and Emerging Market equity funds were more than offset by outflows from quantitative funds. The largest boost to assets, however - 11.5 billion pounds - came from the slide in pound as it weakened against other major currencies on concern the country could vote to leave the EU at a June vote. That more than compensated for a 2.8 billion pound dip in investment performance during the quarter. "The first quarter was a solid start, despite the volatile markets," Chief Executive Peter Harrison told Reuters. Shares in Schroders were down 0.9 percent at 0805 GMT, while the broader FTSE 100 <.FTSE> slipped 1 percent. (Reporting by Simon Jessop; Editing by Rachel Armstrong)